Employer's liability insurance

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Do I need employer's liability insurance?

Learn more about employer's liability insurance exemptions

You need at least £5m of cover if:
  • Hire full or part time employees, including apprentices, interns and other types of workers.

  • Employ contractors to work for you, whether on an ad hoc basis or a more permanent one.

  • Work with volunteers or other staff who provide you with labour on an unpaid basis.

Your business is exempt if:
  • Your staff are all closely related to you, which includes spouses, children, parents and step family

  • You only employ people who are based abroad and are not usually resident in the UK.

  • You’re self employed or only work with others who have an equal share of your business

What does it cover?

Employers’ liability insurance covers your business against the cost of any successful claims made against it by employees who develop an illness or suffer an injury due to their work.

It does this by paying some, or all, of any:

  • Compensation fees your business is ordered to pay if a successful claim is made against it

  • Legal expenses your business is held liable for if a claim goes to court

Some policies may cover more than this, so always check your policy documents to see exactly what protection you have.

Confused bINS Secondary employers liability

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What our business insurance expert says

If your business employs anyone who isn't your family, you need employer's liability insurance. The law states you need at least £5m of cover, even if you only have a single employee. And getting caught without it carries a serious penalty. You could be fined £2,500 for every day you failed to have cover in place.

How could employer's liability insurance help my business?

The below scenarios are for illustrative purposes only, and you should always check your policy documents to see exactly what you’re covered for.


You own a building firm with several workers. While on site, one of your builders falls from a scaffold. They claim they weren’t given adequate training to use the scaffold safely and that their injury has left them with a debilitating fear of heights. They’re now unable to work and are claiming compensation for lost earnings.

Digital workers

You own a marketing agency and take on new staff for a data entry role. The job requires repeated mouse movements that trigger a repetitive strain injury in one of your staff. The staff member claims your failure to provide ergonomic office equipment lead to their injury and files a claim for compensation.

Food service workers

You own a restaurant that has really taken off. You double the amount of diners you used to serve in an evening, but fail to take on any new kitchen staff. This puts a chef you hire on a casual contract under undue stress and they develop a mental health condition as a result. The chef files a compensation claim.


You own a salon and employ two members of staff. One of them is a hairdresser and develops a skin condition due to frequent exposure to hair dye. They claim they weren’t given the right type of gloves to protect their hands and are unable to work due to their condition. They make a claim for loss of earnings as a result.

What affects the cost?

The quotes you’re given are based on several factors, including:

The number of employees you have, as the larger your staff, the higher the chance of one of them sustaining an injury or illness.

The type of industry you’re in, as some are riskier than others. The riskier your business, the higher the chance of you making a claim.

The amount of cover you take out, as the higher your cover amount, the more you’re likely to pay for your insurance. Reducing the amount of cover you take out could help bring your insurance costs down. Just make sure you take out enough, as you legally have to have £5m in place.

The amount of excess you agree to pay. As with all insurance, opting to pay a higher excess often leads to a cheaper overall insurance quote. Just make sure you can afford to pay the excess you agree to in case you need to claim.

Confused bINS Secondary employers liability

What other types of business insurance might I need?

Other types of business insurance you might benefit from include:

Public liability insurance

This type of cover works in a similar way to employers’ liability insurance, and can help protect your business against claims made by members of the public. If you own a building firm and a loose scaffold pole falls and hits a passer by, or if you run a cafe and a delivery person slips on your wet floor you could be held liable. Public liability insurance is there to help you cover the cost of any compensation and resulting legal fees you’re ordered to pay.

Professional indemnity insurance

If your business provides advice, professional services or handles sensitive client data, you could benefit from professional indemnity insurance. Negligence claims made against you for things like poor advice that causes clients financial harm, or improper handling of sensitive data that leads to reputational damage can lead to large compensation claims. Professional indemnity insurance can help you cover the cost.

Who's Simply Business?

The quotes you'll get from us are provided by Simply Business, one of the UK’s largest business insurance providers.

Since 2005, they’ve helped more than 3 million small businesses find the right cover at the right price.

And just like all the partners we work with, they’re authorised and regulated by the Financial Conduct Authority. This ensures they're honest, transparent and trustworthy in all they do.

Get a quote today to see if you could save with Simply Business.


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Need more help with employer's liability insurance?

What doesn't employer's liability insurance cover?

Most employers liability insurance policies come with a few exclusions.

These commonly include:

Your policy may come with other exclusions too. Always check your policy documents to make sure you know exactly what you’re covered for.

Who counts as an employee?

Sometimes it can be tricky to know if someone who’s connected to your business is classed as an employee.

According to the government, there are a few things that define an employee, including if:

  • They’re required to work unless they’re on leave

  • They work at the business’ premises, or at a place specified by the business such as working from home

  • They have a contract that refers to them as a employee

It's important to know if your business technically has employees or not, as this determines whether you need employer's liability insurance or not.

For a full list of definitions, see the government website.

Can an ex employee claim against me?

Yes, an ex employee can file a claim against you for injuries or illness they’ve suffered as a result of their time working for you.

This makes it doubly important to have insurance in place.

Even if you go out of business, having a policy in place for the time you do hire employees ensures you’re protected if they later make a claim relating to that time period.

Page last reviewed: 21/11/2023

Reviewed by: Matthew Harwood

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